Israel Prime Minister Binyamin Netanyahu has said he "expressed apology" to Turkey for any error that led to the death of nine Turkish nationals in 2010 in the Gaza flotilla incident.

Netanyahu also said on Friday that Israel has also agreed to compensate the families of the victims.

In a phone call between Netanyahu and Turkish Prime Minister Recep Tayyip Erdogan, "the two agreed to normalisation between the countries, including returning ambassadors and cancelling legal proceedings against IDF [Israeli army] soldiers," the statement said.

"Prime Minister Netanyahu apologised to the Turkish people over every mistake that could have led to the loss of lives and agreed to complete the agreeement with compensation."

Netanyahu also told Erdogan that Israel had "substantially" lifted restrictions on the entry of civilian goods into the Palestinian territories, including Gaza.

During the phone call, Erdogan underlined the importance of strong cooperation and friendship between Turkey and Israel, his office said.

"Erdogan told [Israeli premier] Binyamin Netanyahu that he valued centuries-long strong friendship and cooperation between the Turkish and Jewish nations".

The White House said President Barack Obama has congratulated Netanyahu over the call, in which he apologised for "operational mistakes". Obama has reportedly arranged the call during his first visit to Israel as president.

Al Jazeera's Nicole Johnston, reporting from Jerusalem, described Netayahu's apology as "an incredible development" adding that it would be seen as a "huge achievement" of the Obama administration.

Johnston also said that it is a "great win for Turkey," which has been demanding the apology.

Meanwhile, Al Jazeera's Elif Ural, reporting from Istanbul, said that Hamas has sent a message expressing disappointment that Turkey has accepted the apology.

Commando raid

On May 31, 2010, Israeli commandos boarded a flotilla of six humanitarian ships on their way to Gaza.